The main motivation behind the administration’s indulgence of serious criminality evidently is fear of the consequences of taking tough action on individual bankers.

***

The message to bank executives today is simple: build your bank to be as big as possible – and then keep growing. If you manage to become big enough, you and your employees are not just too big to fail, but also too big to jail.

To justify this lack of accountability for the nation's wealthiest lawbreakers, the all-too-familiar excuses long used to shield the politically powerful are trotted out on cue. Once again, we are told that prosecutions are too disruptive; that it's more important to fix the system than to seek retribution for the past; that because the wrongdoers' reputation is in tatters, they have already suffered enough; that we need the goodwill of financial titans to ensure our common prosperity; and so on.

In addition, Richard Alford – former New York Fed economist, trading floor economist and strategist – showed that banks that get too big benefit from “information asymmetry” which disrupts the free market.

Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:

“The main problem that Goldman raises is a question of size: ‘too big to fail.’ In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information.”

Further, he says, “That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that’s why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you’re going to trade on behalf of others, if you’re going to be a commercial bank, you can’t engage in certain kinds of risk-taking behavior.”

The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets – making up more than 70% of stock trades – but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).

If We Break Up the Giants, Smaller Banks Will Thrive … And Loan More to Main Street

Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.

***

The amount of loans outstanding to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009, at banks that participated in TARP compared with a 6.2% drop at banks that didn’t.

The really shocking numbers are in the unused line of credit commitments of banks to U.S. business. This is the canary number I like to look at because it is a direct expression of banking and finance confidence in Main Street industry. It’s gone from $92 billion in Dec -2007 to just $24 billion as of Sep-2010. More importantly, the vast majority of this contraction of credit availability to American industry has been by the larger banks, C&I LOC from $87B down to $18.8B by the institutions with assets over $10B. Poof!

Fortune reports that smaller banks are stepping in to fill the lending void left by the giant banks’ current hesitancy to make loans. Indeed, the article points out that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition:

Growth for the nation’s smaller banks represents a reversal of trends from the last twenty years, when the biggest banks got much bigger and many of the smallest players were gobbled up or driven under…

As big banks struggle to find a way forward and rising loan losses threaten to punish poorly run banks of all sizes, smaller but well capitalized institutions have a long-awaited chance to expand.

As big banks struggle, community banks are stepping in to offer loans and lines of credit to small business owners…

At a congressional hearing on small business and the economic recovery earlier this month, economist Paul Merski, of the Independent Community Bankers of America, a Washington (D.C.) trade group, told lawmakers that community banks make 20% of all small-business loans, even though they represent only about 12% of all bank assets. Furthermore, he said that about 50% of all small-business loans under $100,000 are made by community banks…

Indeed, for the past two years, small-business lending among community banks has grown at a faster rate than from larger institutions, according to Aite Group, a Boston banking consultancy. “Community banks are quickly taking on more market share not only from the top five banks but from some of the regional banks,” says Christine Barry, Aite’s research director. “They are focusing more attention on small businesses than before. They are seeing revenue opportunities and deploying the right solutions in place to serve these customers.”

The importance of traditional financial intermediation services, and hence of the smaller banks that typically specialize in providing those services, tends to increase during times of financial stress. Indeed, the crisis has highlighted the important continuing role of community banks…

For example, while the number of credit unions has declined by 42 percent since 1989, credit union deposits have more than quadrupled, and credit unions have increased their share of national deposits from 4.7 percent to 8.5 percent. In addition, some credit unions have shifted from the traditional membership based on a common interest to membership that encompasses anyone who lives or works within one or more local banking markets. In the last few years, some credit unions have also moved beyond their traditional focus on consumer services to provide services to small businesses, increasing the extent to which they compete with community banks.

Thomas M. Hoenig pointed out in a speech at a U.S. Chamber of Commerce summit in Washington:

During the recent financial crisis, losses quickly depleted the capital of these large, over-leveraged companies. As expected, these firms were rescued using government funds from the Troubled Asset Relief Program (TARP). The result was an immediate reduction in lending to Main Street, as the financial institutions tried to rebuild their capital. Although these institutions have raised substantial amounts of new capital, much of it has been used to repay the TARP funds instead of supporting new lending.

On the other hand, Hoenig pointed out:

In 2009, 45 percent of banks with assets under $1 billion increased their business lending.

45% is about 45% morethan the amount of increased lending by the too big to fails.

Indeed, some very smart people say that the big banks aren’t really focusing as much on the lending business as smaller banks.

Specifically since Glass-Steagall was repealed in 1999, the giant banks have made much of their money in trading assets, securities, derivatives and other speculative bets, the banks’ own paper and securities, and in other money-making activities which have nothing to do with traditional depository functions.

Now that the economy has crashed, the big banks are making very few loans to consumers or small businesses because they still have trillions in bad derivatives gambling debts to pay off, and so they are only loaning to the biggest players and those who don’t really need credit in the first place. See this and this.

The Fortune article discussed above points out that the banking giants are not necessarily more efficient than smaller banks:

The largest banks often don’t show the greatest efficiency. This now seems unsurprising given the deep problems that the biggest institutions have faced over the past year.

“They actually experience diseconomies of scale,” Narter wrote of the biggest banks. “There are so many large autonomous divisions of the bank that the complexity of connecting them overwhelms the advantage of size.”

And Governor Tarullo points out some of the benefits of small community banks over the giant banks:

Many community banks have thrived, in large part because their local presence and personal interactions give them an advantage in meeting the financial needs of many households, small businesses, and agricultural firms. Their business model is based on an important economic explanation of the role of financial intermediaries–to develop and apply expertise that allows a lender to make better judgments about the creditworthiness of potential borrowers than could be made by a potential lender with less information about the borrowers.

A small, but growing, body of research suggests that the financial services provided by large banks are less-than-perfect substitutes for those provided by community banks.

It is simply not true that we need the mega-banks. In fact, as many top economists and financial analysts have said, the “too big to fails” are actually stifling competition from smaller lenders and credit unions, and dragging the entire economy down into a black hole.

In addition, many top economists and financial experts, including Bank of Israel Governor Stanley Fischer – who was Ben Bernanke’s thesis adviser at MIT – say that – at the very least – the size of the financial giants should be limited.

The report was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.

This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.

And as I noted in December 2008, the big banks are the major reason why sovereign debt has become a crisis:

BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.

In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.

Similarly, a study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent hurts the economy:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

The big banks have been bailed out to the tune of many trillions, dragging the economy down a bottomless pit from which we can’t escape. See this, this, this and this. Unless we break them up, we will never escape.

The Failure to Break Up the Big Banks Is Dooming Us to Depression

All independent experts agree that unless we rein in derivatives, will have another – bigger – financial crisis.

Harold Bradley – who oversees almost $2 billion in assets as chief investment officer at the Kauffman Foundation – told the Reuters Global Exchanges and Trading Summit in New York that a cabal is preventing swap derivatives from being forced onto clearing exchanges:

There is no incentive from the moneyed interests in either Washington or New York to change it…

I believe we are in a cabal. There are five or six players only who are engaged and dominant in this marketplace and apparently they own the regulatory apparatus. Everybody is afraid to regulate them.

That’s bad enough.

But Bob Litan of the Brookings Institute wrote a paper (here’s a summary) showing that – even if real derivatives legislation is ever passed – the 5 big derivatives players will still prevent any real change. James Kwak notes that Litan is no radical, but has previously written in defense in financial “innovation”.

Here’s a good summary from Rortybomb, showing that this is yet another reason to break up the too big to fails:

Litan is worried about the “Dealer’s Club” of the major derivatives players. I particularly like this paper as the best introduction to the current oligarchy that takes place in the very profitable over-the-counter derivatives trading market and credit default swap market. [Litton says]:

I have written this essay primarily to call attention to the main impediments to meaningful reform: the private actors who now control the trading of derivatives and all key elements of the infrastructure of derivatives trading, the major dealer banks. The importance of this “Derivatives Dealers’ Club” cannot be overstated. All end-users who want derivatives products, CDS in particular, must transact with dealer banks…I will argue that the major dealer banks have strong financial incentives and the ability to delay or impede changes from the status quo — even if the legislative reforms that are now being widely discussed are adopted — that would make the CDS and eventually other derivatives markets safer and more transparent for all concerned…

Here, of course, I refer to the major derivatives dealers – the top 5 dealer-banks that control virtually all of the dealer-to-dealer trades in CDS, together with a few others that participate with the top 5 in other institutions important to the derivatives market. Collectively, these institutions have the ability and incentive, if not counteracted by policy intervention, to delay, distort or impede clearing, exchange trading and transparency…

Market-makers make the most profit, however, as long as they can operate as much in the dark as is possible – so that customers don’t know the true going prices, only the dealers do. This opacity allows the dealers to keep spreads high…

In combination, these various market institutions – relating to standardization, clearing and pricing – have incentives not to rock the boat, and not to accelerate the kinds of changes that would make the derivatives market safer and more transparent. The common element among all of these institutions is strong participation, if not significant ownership, by the major dealers.

So Bob Litan is waving a giant red flag that the top dealer-banks that control the CDS market can more or less, through a variety of means he lays out convincingly in the paper, derail or significantly slow down CDS reform after the fact if it passes.

***

If you thought we’d at least get our arms around credit default swap reform from a financial reform bill, you should read this report from Litan as a giant warning flag. In case you weren’t sure if you’ve heard anyone directly lay out the case on how the market and political concentration in the United States banking sector hurts consumers and increases systemic risk through both political pressures and anticompetitive levels of control of the institutions of the market, now you have. It’s not Matt Taibbi, but it’s much further away from a “everything is actually fine and the Treasury is in control of reform” reassurance. Which should scare you, and give you yet another good reason for size caps for the major banks.

Joseph Stiglitz (the Nobel prize winning economist) said recently that the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action

There has been no honest examination of the crisis because it would embarrass C.E.O.s and politicians . . .Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well. There have been no prosecutions of the chief executives of the large nonprime lenders that would expose the “epidemic” of fraudulent mortgage lending that drove the crisis. There has been no accountability…

The Obama administration and Fed Chairman Ben Bernanke have refused to investigate the nature and causes of the crisis. And the administration selected Timothy Geithner, who with then Treasury Secretary Paulson bungled the bailout of A.I.G. and other favored “too big to fail” institutions, to head up Treasury.

Now Lawrence Summers, head of the White House National Economic Council, and Mr. Geithner argue that no fundamental change in finance is needed. They want to recreate a secondary market in the subprime mortgages that caused trillions of dollars of losses.

Traditional neo-classical economic theory, particularly “modern finance theory,” has been proven false but economists have failed to replace it. No fundamental reform can be passed when the proponents are pretending that there really is no crisis or need for change.

Regulatory agencies are often sympathetic to the industries they regulate. This pattern is so well known among scholars that it has a name: “regulatory capture.” This effect can be due to the political influence of the industry on its regulators; or to the fact that the regulators spend so much time with their charges that they come to accept their world view; or to the prospect of lucrative private-sector jobs when regulators retire or resign.

Economic consultant Edward Harrison agrees:Regulating Wall Street has become difficult in large part because of regulatory capture.

But there is an even more interesting reason . . .

The number one reason the TBTF’s aren’t being broken up is [drumroll] . . . the ‘ole 80?s playbook is being used.

In the 1980s, during the height of the Latin American debt crisis, the total risk to the nine money-center banks in New York was estimated at more than three times the capital of those banks. The regulators, analysts say, did not force the banks to value those loans at the fire-sale prices of the moment, helping to avert a disaster in the banking system.

In other words, the nine biggest banks were all insolvent in the 1980s.

Indeed, Richard C. Koo – former economist at the Federal Reserve Bank of New York and doctoral fellow with the Fed’s Board of Governors, and now chief economist for Nomura – confirmed this fact last year in a speech to the Center for Strategic & International Studies. Specifically, Koo said that -after the Latin American crisis hit in 1982 – the New York Fed concluded that 7 out of 8 money center banks were actually “underwater” and “bankrupt”, but that the Fed hid that fact from the American people.

So the government’s failure to break up the insolvent giants – even though virtually all independent experts say that is the only way to save the economy, and even though there is no good reason not to break them up – is nothing new.

William K. Black’s statement that the government’s entire strategy now – as in the S&L crisis – is to cover up how bad things are (“the entire strategy is to keep people from getting the facts”) makes a lot more sense.

George I think most americans' know what you wroite, above, the majority of americans want it, but they are owned by the banks. notice every person since the crissi has won on an anti bank platform, none have acted on it. I include mr hope for change Obama. the banks choose who we can choose from. the system is rigged and fixed in their favor

There is likely validity in saying that a large part of the reason that banks are so corrupt and dominant is thier and resulting influence, but the converse does not necessarily follow.
I suspect that the underlying reason that they are so dominant is the vacuum of leadership eminating from Washington. And it would be a gross oversimplification to lay that on obama - obama like bush is a symptom.

We endlessly heard that hedge fund doods, like John Paulson, were savvy financial geniuses, super traders!

Then we learn that Paulson got together with Goldman Sachs and put together a CDO (perhaps more than just one??) that was designed to fail. Paulson's hedge fund then purchased a bunch of credit default swaps (termed "naked swaps") against that designed-to-fail CDO, ensuring that a big payday was to follow.

Paulson would purchase CDSes at $1.4 million apiece, with a payout of $100 million apiece --- quite the rigged mega-deal!

And that's one of the reasons that they bailed out AIG --- to make good on Paulson's rigged deal, and those of Goldman Sachs, JPMorgan Chase, Morgan Stanley, et al.

It wasn't like Paulson had some magical crystal ball, or awesome financial skills, plus the guy behind the housing bubble, the Federal Reserve's Alan Greenspan, had gone to work for Paulson at his hedge fund!

Next we learn that hedge fund doods routinely requested the manipulation of LIBOR rates to benefit their various deals; so for all we know, Paulson may very well have requested rate manipulation to make that CDO deal more attractive, along with lucrative rates on all those swaps he purchased which made him a fortune?

So we now realize the gargantuan size of this mind-boggling fraud manipulation, this global racketeering: CDO deals, ARM rates manipulation for various credit derivatives benefitting the dealers and banksters and hedge fundsters, all those interest rate swaps to doom cities and municipalities being manipulated along with the Fed's downturn on interest rates, and those syndicated leveraged loans between 2005 to 2007 from the top bankster gangsters to the private equity firms specifically for their LBOs (leveraged buyouts, creating debt to the max to profit themselves, while destroying companies, jobs and industries).

Any public official or official representing a private corporation, (elected, appointed or salaried) that lies to the public is guilty of criminal felony action. Such action requires a mandatory sentence of 5 years in a maximum security prison.

Corporations are not any different. A whole big racket everywhere. Honest money making out, fraud, deception, personal gains at all costs, in. Welcome to the new world where the old bad is the new good. Abolish hollywood and wall street. It is time.

PETITION: I support, and I ask the United States Senate to support, a Constitutional amendment to overturn "Citizens United," preserve the integrity of our elections, and protect our right to self-governance.

This petition will be delivered to the Senate Judiciary Committee on Tuesday July 24, along with petitions from many other good government organizations.

On Tuesday July 24 at 2:30 PM the Senate Judiciary Committee Subcommittee on the Constitution, Civil Rights and Human Rights will host:

“Taking Back Our Democracy: Responding to Citizens United and the Rise of Super PACs”

Coffee Party leaders Annabel Park and Will Rice will be there. Lawrence Lessig and Buddy Roemer are testifying at the hearing. The hearing is at 02:30 PM in Hart 216. Hart is the Senate building at Constitution Avenue, C Street, First Street, and Second Street N.E., it adjoins the Dirksen Senate Office Building (View map) in Washington, DC 20002.

Here's your chance, Americans. Spread this far and wide as there are only 2 days left to get 1 million signatures to overturn this law.

Yo, doodette, why not petition the Rockefeller famil, the Morgan-Schilling family, the Mellon-Scaife family, the Zemurray-Stone family, the Du Pont-Donaldson family, and the other super-rich?

Since they are the controllers at the top of this faltering pyramid.

In case you haven't figured it out yet, doodette, the last two democratic senators have long since gone from the US Senate (Dorgan finally gave up and retired, much thanks for his effort, Feingold was voted out).

We can be assured progress will ever be made as long as the witless doucheys continue to follow the likes of Lessig, Moyers, and Chomsky (stealth operators all).

Fuck you asshole. I don't claim to be an expert on the state of demise of this USA, I don't have time to read every article and remember every name, I have to work. I also have only so much room in my head and after I am finished absorbing the little information I can, I am so goddam depressed that I can hardly function.

So get off my back and use your time to spread the news with the corrections you have just provided.

No one can understand why Americans aren't paying attention. But that isn't it. How can you expect them to grasp the seriousness of the situation? It's unbelievable, literally, that elected officials have allowed the banking industry to place a garotte around their necks, leading to a possible life of nothing but drudgery and great poverty.

Who has room in their head for this after you've worked for as long as you possibly can and still cannot pay the bills? When you know you'll never retire because your equity is GONE and to top it off, finding a job will be next to impossible unless you have a network in place. Who has the ability to process this information, put it into prospective and then go about their daily lives being productive citizens, parents, neighbors?

I've been on this goddam keyboard since 2001 banging away under the name "NothinsAsItSeems" aol.com trying to bring attention to the fact that we are being manipulated. I am limited yes but I am doing the best that I can. You, on the other hand, add nothing but disparaging remarks to discredit people because you have nothing to add.

What they are doing financial terrorism and treason. And this sums it up. Stop talking BS start doing something. I dont know eye for an eye is a good solution. It always works and results are immediate. None of this lets go to court BS. Take everything they own from them. They steal the money and stash it in Cayman Islands, Swiss account $23T of it check it out at http://www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offshore-economy?commentpage=11#start-of-comments this is insanity. All this talk while they are committing the most brutal crimes of the entire human history. Stealing from babies, families, old people, bankrupting the whole countries.

So unless you are going to do something about it stop whining. This is utter BS.

The best analogy is to forest fires. For 100 years, people had a policy of snuffing out every forest fire, regardless of size. Eventually, the amount of dry tinder built up so high that the eventual megafire burned the entire forest to the ground and melted the sand into glass. It is the same thing with the financial system. The Latin American Debt Crisis and the Continental Illinois bailout in the 1980s were the first fires that should not have been put out, and there were many more since (LTCM, Bear Sterns, AIG, TARP, etc....) Now we have a huge pile of combustible debt that is capable of burning the whole global financial system to the ground and initiating World War III. And it is piling higher every day.

"In the 1980s, during the height of the Latin American debt crisis, the total risk to the nine money-center banks in New York was estimated at more than three times the capital of those banks. The regulators, analysts say, did not force the banks to value those loans at the fire-sale prices of the moment, helping to avert a disaster in the banking system."

Doesn't it seem odd that the "financial industry" is one of the most heavilly regulated in our economy yet continues to be the most dangerous to our economy?

The truth is, it is regulatory capture.

Academics and policy makers (in their private lives) move as effortlessly from government institutions to IB banks and back as if they were just strolling down the street on an autumn day.

A Reich, a Paulson an Orszag et al...can just change their hat one day, announce they are completely righteous, virtuous and dignified men and go to work "for the other side" and the sheeple are to take it at face value?...accept their words and trust them again...even after all thats happened?

Really?

You shape public policy, you pass laws, you enforce those laws through regulation, you leave to profit from it and when it all goes to shit you howl from the faculty lounges and board rooms across the land that what we need now are more regulation and laws.

No, you kleptocratic dickweeds, your pensions need to be clawed back for your "outstanding government service" to us and your tenure stopped for intellectual malpractice if you are now holed up in "academia".

If you are now in a TBTF the umbilical cord to the public treasury needs to be cut and your new boss can more capably assess "your true value" more clearly as he goes out to raise capital in the private sector.

If you are still hanging out inside a bureacracy somewhere hoping no one will notice you now, shuffling your papers around and watching porn to pass the day, be advised we're going to cut off your check & pension.

None of you shed a tear for us as unemployment skyrocketed outside your little circle of friends. You convinced just enough people to believe one final time in unicorn farts and fairy dust to keep the debt piling up and you in your house...now they see you as well, what you are (a parasite, a crony), your time has run out.

"regulatory capture" is what it is in the aim of going to new places; not constrained by natiional boundaries. We are now in one huge Serengeti/Tsavo domain where the oligarchs are lion kings; all others the antelopes, and anything goes as Darwin said.

The crossroads of civilization used for trading goods soon became the perfect location to accumulate the flow of wealth from the ranchers and farmers to the bankers and theives. Come to present time, wealth still flows more or less recipricoly between city and countryside. Except now the cities produce nothing at all. Everything comes from China. Where is the wealth flowing to? They used to say follow the money, but now we say

My efforts to fight these shit-lippers might be futile but I am not stopping.

"This is not Bedford Falls and we are not dealing with Bailey Building and Loan Association, an institution vital to the well-being of the townspeople. In the real world, George Bailey no longer exists and Mr. Potter did indeed steal and keep Uncle Billy’s $8,000."

"The stern looking bank regulator not only approved and encouraged this theft but also helped Mr. Potter convert that money in to trillions of dollars of unregulated derivatives; conspired to pay no taxes then proceeded to conceal that fact. To allow this charade to persist would be catastrophic."

"Were it not for the verifiable truth that the U.S. government has entitled itself with the authority to print money as though it was ordinary paper, and are projecting a budgetary shortfall of over one [1] trillion dollars for this year alone; it is they who should accept their spot on the mantle as the least credit-worthy of all. It is also worthy of note and equally frustrating that this printed money is handed directly to the banks."

"It should be noted that those at the controls of these enterprises, both past and present, are comprised of controllers whose career paths travel through a constantly revolving door between government agents and commercial bankers. The GSEs are the final pipelines that inject the losses to the public, while the profits are kept by the bankers. As we are all well aware, FNMA and FHLMC are in conservatorship and financially are gravely disabled as should also be expected."

"Many of the alleged mortgagees that waltz into this Court are already bankrupt both morally and financially. Those that aren’t financially bankrupt would be if it weren’t for reckless tax-payer bailouts that were angrily objected to by the taxpayers themselves. To foolishly continue this dishonest course may very well bankrupt the entire country if not the world. To further suggest that should these financial leviathans that now stride the earth suffer their demise as a result of their own bad acts, it would spell undoubtful doom for all with no other option but to salt the earth and burn the churches."

"This is ridiculous. The only ones that would be doomed would be them. The vacuum that would be created by their rightful rejection would be filled by honest institutions that are not financial predators. We are utterly sick of their financial junk innovations that they have, quite literally, turned into a mortal death pledge."

"It is here in this Court where the final square peg is hammered through its final round hole. The curtains are closing in this dreary denouement as the fortunes of families are faded to black."

"Rather than looking at these financial raiders with a well-deserved jaundiced eye it appears that Rhode Island Courts have instead literally roll out a red carpet. In this final act of judicial mal-prudence this court has made it its business to resuscitate to life the contractual cadaver that is the securitized mortgage."

Classical economics was the political program of industrial capitalism seeking to freesociety from the rentier interests. Resisting the classical distinctions between productive andunproductive investment, credit and employment, the postclassical economists endorsed bythe rentiers (receiving their charitable largesse as well as the “badge of true science”) insistthat all income and wealth is earned productively. Everyone earns whatever he or shemakes, so there is no unearned wealth. There are no “idle rich.”This is the political service performed by the postclassical Austrian and “neoclassical”counter-revolution: denial that rentiers play an unnecessary role.

As long as rentiers in the FIRE sector wield the resources to control and essentially own the government, there won't be any enforcement of laws against them. And since there's a vociferous mob of useful idiots screaming against government regulation per se--rather than raising hell about the lack of essential enforcement by government--we're realistically looking at only more of the same. Neo-feudalism here we come.

Of course they are destroying America. They have declared war against the US and are and have been destroying it. Then they will depopulate it and buy it up for pennies. Except for the depopulation thing that is what bankersters do, Argentina, Greece, Spain, Portugal, Ireland, Italy, Germany, France, Latin America and everywhere they go that is what they do. Its their business model.

In the US they are getting close to entering their depopulation phase where they stop the medical system from functioning. They begin buying up everything through shell companies and a state run police force is used to attack any protests.

Bankster terrorists in our backyards. They are dressing their military force up like 7 foot black tall Darth Vaders. I don't know why but that is what Hillary and the person in the white house think is best for the US. In college they pepper spray us every so often. I don't know why but I think it is to help protect Nancy Pelosi's millions from being confiscated.

Read today's NYT article by Gretchen Morgenson on efforts by Neil Barofsky to regulate TARP program . In recently published book " Bailout " he recounts the bias within government to protect big banks. The system is rigged with pressure for everyone in power to protect their ass. Collapse is only way to break this system of greed and criminal behavior. Unfortunatly everyone will suffer.

The root of the problem is fiat money and big government, the banks are just a symptom. Until we get to a real capitalist system where money can not be created at will and individuals have to both bear the risk and reap the rewards of their own decisions we will continue on the path to collapse.

The collapse has already happened we have just not felt the full impact of the pain. I am hopeful that the outcome will be more people seeking a real capalist system in which the individual will think for themselve and not seek the governments guidence. Unfortuneately, this will be a generation or two out, because our children today are being taught that they cannot create a job or business on their own, and government regulations enfoce that teachng every step fo the way. I think we need to remember big govenment comes in many forms: An example that comes to mind is try and sell something like home made bread from your home? How long would you last before the City, County or State food inspector would be out to shut you down? People in these positions enforcing regulations are neighbors, friends and relatives. The problems are not just at the federal level and TBTF interstructure, it's in our neighborhoods and communities in which we live. Again, I remain hopefull that as more and more pain is felt the thinking of the average American will see the wisdom of a real caplist system.

Now Mike didn’t have the information we have today. Today we know that a very large percentage of drug use is self medication. And given our still primitive stage of knowledge maybe all of it. Which is why drug demand is so inelastic.

unbelieveable! And not only will Obama do nothing to stop the criminal banksters, but the most corrupt criminal government official of all time -Tim Geithner -is still in office. I cannot believe the stupid morons in this country still give the criminal Obama a 50/50 chance of winning. Destroy the mainstream media -tear their buildings down -brick by brick - get rid of the criminal bums in Congress--take our lumps, start over and rebuild. It will hurt -but it's going to hurt anyway. It will come crashing down and the psychopaths will be leading off to war again -- a much bigger one.

here we have -"Bank of Israel Governor Stanley Fischer "\Bob Litan of Brookings Institute\the Bank of International Settlements...and last but by no means least[of the minions of the beast] Paul Krugman all lined up onside for George's supposed solution to the woe's of the west!

RE-GUL-ATE! ...if ever an anti-statist needed a "red flag" to tell them to run the other way from George's travelling flea circus of circumcised truth tellin, this is it!

Just what the doctor ordered for a socio-economic breakdown brought on by kabal-istic kollective dictatorship of lawyers, legislators, legalized lawbreakers and lying mediacrats, all feeding like a nest of nasty gnats on the festering flesh of a wounded and weary body politic...more laws!!!!!!!!!!

Is this some kind of sick joke? Have GW and MDB mind-melded into some kind of prog borg?

Break up the big banks~! Brilliant...just like breaking up the big conglomerates was,back in the day, allowing them to metastatize into many layers of foundations, interlocking directorships, and governmental alliances that effectively cemented their control over all aspects of the Euromerikan economies. You'd have to be a Wall St lawyer to dream up something so insidiously effective! And a paid shill of same to prosletyize for something so invidious!

But let's be positive! Maybe George, in his apparent role of controlled opposition gatekeeper, is actually, like a character frim a John Le Carre novel, working all sides of the street...and has quietly passed us the keys to unlocking the puppetmasters' program, the psyop designed to confuse and mislead the honest seeker, and render resistance futile!

Months ago I predicted that part of the Obamanations' relection strategy, post the success of the OWS scam, would be to 'throw the big banks under the bus'...to use a populist ruse of seeming to be siding with the peeple against the power...all the while of course, guided in this Machivellian gambit by the same eminences grise who guide the TBTF banks in theirs!

The script calls for much crowing about 'fairness' and reform, and impressive promises of post election crackdowns, and whatever soothing words are necessary to guide the opposition to the ongoing CampFemerika transition into a quiet corner for the balance of Merika's final fantasy election.

And here's all the confirmation we needed, with this lineup of lying lunatics[aka "top economists" banded together to spout off about stuff way too simple for their understanding...while yu can use a thief to catch a thief, yu can't make 'good' laws to catch bad people. Nor can u employ 'the State' to mitigate the larceny and lusts of those who own the 'State'...the jury is still out on just who's yur Daddy, George, but the deep game yu would appear to be playing is likely to leave hung up somewhere on a barbed wire fence, as the seachlights sweep out in yur direction!

interesting theory, joyful. nevertheless, cui bono? who profits from keeping the big five vampires and their web of derivatives? or to ask in a different way, what do I and you lose if they are broken up and the regulatory environment is brought back to their very old levels?

This kind of market intervention has a long history, in the US, including the Sherman Antitrust Act of 1890. Rockefeller's Standard Oil was broken up in 34 companies in 1911. Do you miss Standard Oil? The Bell/AT&T company was broken up in 1974. Do you miss a monopolistic giant in the telecommunications landscape?

I see in this very strange list people like Alan Greenspan. But dear Alan has written on every conceivable side, he wrote for gold AND for credit bubbles, against antimonopolistic laws AND for the breakup of this banks.

So my question stands. WHY NOT, question mark. Is it religion, that corporates are pure and sacrosanct and the dirty hand of government should not defile? Who stands to lose if this breakup happens? We for sure know who is making obscene bonuses, at the moment.

look, I know that u are in Europe, so I am prepared to cut yu some slack when it comes to USA internal affairs....some slack, Ghordius...

but if yu had read my comment carefully, it covers the historical effects of scripted breakups....the outcome is likely to be exactly the same as was witnessed when yur own example, Standard was dismembered...I'll give yu one contextual article to read thru, it's gettin late where I live, I'm done for the day here...if u wish, this can be amplified upon on the morrow.

btw...yu entirely misunderstood the position behind my critique of the Wooly Washington interventionist impulse...I warned yu of exactly that the other day here...the misuse of my anti-statist arguments to construe a [false] allegiance to a defective austrian(continentental pls note) ideology on my part will only lead to misunderstanding and unnecessary friction...my recorded comments on these pages are consistent and self explanatory of my tru adherence and principles, as is my avatar.

joyful, thx for the slack and thx for the interesting link about the let's call it the "Covert Rockefeller Nexus". Yes, there are many of those covert nexi of power and influence.

yes, it's a lot of Muppets (and Puppets of Muppets) that are calling for those changes, including me. some started earlier, others later.

but isn't the whole point of antitrust and anticartel interventions to redimension overt trusts and cartels?

today, the TBTF nexus is an overt, open, visible, legal cartel with the evident power of elbowing Oncle Sam to cough up a cool trillion per mugging, armed with tactical frontrunning HFT bots and strategic derivative markets databases binding the whole financial world into their planned price paths - the ultimate price "fixing". all this without even mentioning the FED.

the Muppets are getting nervous, joyful.

the call for a return to previous, tested and simpler regulation is sensible.

the call for a use of previously used, tested and simple antitrust solutions like with Standard and Bell is sensible.

they are consistent to previously used, tested and simple principles, too.

and Hercules has still to tackle this five-headed hydra, she is still alive and only bleeding slightly. and she still enjoys the protection of legions of apologists, storywriters, smokelayers, lawyers, think-tanks, lobbyists, fillers of political campaign coffers and politicians.

The British Muppets, for example, don't even trust London resources anymore for an Augian stable clean-up, they are loudly thinking about joining forces with the (gasp) other europeans, perhaps even through (double-gasp) the ECB.

...but isn't the whole point of antitrust and anticartel interventions to redimension overt trusts and cartels?...

yes, indeed it is. Rather like the whole point of diverting customer funds held in trust by pillars of Kapitalism like MFG or PGE to a safe home in JPM is to, er, redimension overt theft and larceny into a kinder, gentler form of 'wealth redistribution for the overtly wealthy.'

"Redimension?" What kind of insane Orwellian play upon words is this Ghordius? Customer funds get "vaporized," whilst kriminal kartels get 'redimensioned"...like cutting up pieces of a self-replicating organism and watching it reproduce in greater[covert] numbers!?!?! A concept I covered in sufficient detail in my previous missive to give anyone paying attention all the clues needed to see "cui bono"!!!!!

What I fail to see how yu could have given any time at all to reading the reference provided, and still write the above quoted. As a one-time only gesture of goodwill, I will zero in for yu on a passage from the ignored information so as to conclusively demonstrate the effects of yur 'redimensioning' in the real world...

Rockefeller had "retired from active business", namely in 1911, he had been convicted by a U.S. court of illegal practices and ordered to dissolve the Standard Oil Trust, which comprised 40 corporations. This imposed dissolution was to provide his Empire with added might, to a degree that was unprecedented in the history of modem business. Until then, the Trust had existed for all to see - an exposed target. After that, it went underground, and thereby its power was cloaked in security, and could keep expanding unseen and therefore unopposed. http://www.whale.to/b/ruesch.html

As to the rest of yur comment, I have time only to tackle one other example of yur apparent form of (continental) humorism...

"the call for a return to previous, tested and simpler regulation is sensible."

Hey, I like retro stuff too! Those old cartoons n tv shows from the 50's n 60's are a blast! But surrounding ourselves with the iconography of a fantasized(and sanitized)golden era of justice n plenty is not going to be helpful in solving the mess of the moment, any more than smoking mountains of weed makes a person's problems 'vaporize!